Market Overview

Five Companies That Recently Boosted Share Buybacks

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In order to return cash to shareholders, companies often repurchase their own shares. Share repurchases are also referred to as buybacks.

Repurchasing shares may signal that executives believe their company's shares are undervalued. In this case, the company might be able to repurchase shares at attractive prices.

Alternatively, share repurchases might signal that a company has exhausted its investment opportunities. A lack of investment opportunities might have negative implications for the company's future profitability.

Below are five companies that have increased buyback plans in June:

Home Depot (NYSE: HD): On June 6, Home Depot announced a $500 million increase to its buyback plan for a total of around $4 billion. According to Home Depot, the increase will not have a material impact on fiscal 2012 earnings per share because of the timing of the repurchases. Accordingly, Home Depot reaffirmed its sales and diluted earnings per share guidance for full-year fiscal 2012.

In a statement, Home Depot's Chairman and CEO Frank Blake said, "The Home Depot has a strong foundation of customer service, product authority and value creation. We will continue to build on our strategic priorities as we look to 2015 and beyond."

Home Depot traded around 0.4% lower Wednesday.

Oracle (NASDAQ: ORCL): Monday, Oracle announced that its board of directors authorized an additional $10 billion of common stock repurchases under an existing repurchasing program. This announcement came as Oracle's fourth quarter results topped analyst estimates.

Oracle President and CFO Safra Catz commented on the company's fourth quarter results, “Our record-breaking fourth quarter featured several all-time highs for Oracle: new software license sales of $4 billion, total software revenue of $8 billion, total revenue of $11 billion, and EPS of 82 cents.”

Oracle traded up as much as 1.5% Wednesday.

AutoDesk (NASDAQ: ADSK): Autodesk increased it share repurchase program Wednesday by $30 million, in addition to $12 million authorized in a prior repurchase program. The company stated that the authorization has no expiration date and that the timing of the repurchases will depend on cash generated from operations, economic and market conditions, and stock price.

Mark Hawkins, Autodesk Executive Vice President and CFO, stated, “With strong cash generation and a cash and investments balance of approximately $1.8 billion at the end of last quarter, we are committed to share repurchase as a key element of our capital allocation.”

AutoDesk traded up around 0.2% Wednesday.

InterDigital (NASDAQ: IDCC): In a Monday statement, InterDigital announced an increase to its share repurchase program of $100 million, for a total of $200 million. This news came along with InterDigital's announcement of a $375 million patent transaction with Intel.

InterDigital President and CEO William J. Merritt noted, "In addition to patent sales, InterDigital is committed to our previously stated goal of generating $800 million in sustainable annual revenue in the next three to five years. Furthermore, the added financial strength generated as a result of the sale of these patent assets to Intel enables us to pursue our licensing efforts even more aggressively, while also continuing the development of new inventions that will drive the future of wireless."

InterDigital traded up around 2.3% Wednesday.

American River Bankshares (NASDAQ: AMRB): American River Bankshares announced on June 15 that it would increase its share repurchase program to approximately 593,500 shares from 494,500 shares. American River Bankshares is a parent company for American River Bank, a bank serving the greater Sacramento area.

David Taber, President and CEO of American River Bankshares, remarked, “We continue to believe that the current market value of the Company's stock is not reflective of the Company's value.”

Taber added, “We have been buying shares at prices below our book value which is a good use of our capital resources and this small increase in the repurchase plan reflects our focus on enhancing shareholder value.”

American River Bankshares traded down close to 0.4% Wednesday.

Posted-In: Long Ideas News Short Ideas Buybacks Trading Ideas Best of Benzinga

 

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